DELL - Earnings call transcript Q4 2019

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Operator

Good afternoon, and welcome to the Fiscal Year 2019 Fourth Quarter Earnings Conference Call for Dell Technologies Inc. I'd like to inform all participants this call is being recorded at the request of Dell Technologies. This broadcast is the copyrighted property of Dell Technologies Inc. Any rebroadcast of this information, in whole or part, without the prior written permission of Dell Technologies is prohibited.

As a reminder, the company is also simulcasting this call at investors.delltechnologies.com. webcast year. available this location the of one for replay will at be same A

remarks, will over prepared you like Director Following we Investor may to Instructions] session. of turn I'd begin. [Operator the Mrs. call Relations. to Litzler-Hollier, conduct Karen Litzler-Hollier, the question-and-answer

Karen Litzler-Hollier

web our and Johnson. Thanks, and our Operations, to I release and Treasurer, Tyler are Jeff posted website. for Sweet; our our and With me joining for Clarke; on Erica, Tom us. Vice We encourage press these everyone review today additional thanks our CFO, deck Chairman, Products our perspective. you documents

Our on Friday fiscal March be XXXX XX-K will XX. filed

Before I like items. would I to turn it Tom, few to highlight a over

operating reference financial adjusted revenues, and we EBITDA, measures including press release. most flow call, EBITDA our and will this found free GAAP comparable deck During their A can measures non-GAAP to net be these income, in reconciliation cash directly of income, operating measures, expenses, metrics. non-GAAP gross margins, web

Our noncash adjustments such refer QX fiscal discrete The these certain transaction accounting, adjustments of amortization as details. value of purchase the related beginning are Please equity majority non-GAAP the Slide intangibles, impact slides XX items. fair year adjustments on and results as as in the well exclude nature. tax XXXX expenses to of and supplemental for more

periods past We recast change. Non-GAAP discrete and enhance fair operating items. income other income to to operating non-GAAP as changes on to this mark-to-market the value non-GAAP Our been prior tax on net of among the adjustments investments reflect income items, now performance. current these for well net equity as presentation performance has made excludes, comparability net reevaluated of

are XXXX and Class transaction, not V EPS numbers Given QX fiscal meaningful. the year our non-GAAP

in QX. The the as to XX Class more for for of equity analyst year. if We detail. which models an transaction non-GAAP at happened beginning non-GAAP EPS V the See is the the most view have adjusted EPS web reflects Slide deck have included comparable

A annual XX these measures year to guidance note year-over-year most provide refer call. deck. their in reconciliation of for percentages unless Slide on specified. this found growth change, GAAP otherwise web all the will fiscal also measures Please on comparable We that non-GAAP to can be XXXX later directly

assume like on Finally, results during call current events all I'd statements statements you future forward-looking remind risks that discussed from materially Statement based could results of section this and due our our obligation Actual statements. forward-looking to no events that are made We update in a those projected which in Cautionary expectations. to are and differ to number to deck. relate and web uncertainties, our

it I'll turn over Tom. to Now

Tom Sweet

in and transformation investment Thanks, of the daily. vast cycle a Karen. created midst driven We amounts technology were by data of led digital

businesses drive transform focus their to enabling and Our customers digitally is forward.

new and of strong We customers’ partner meet our leading customers solutions this unique I compute have with financial is HCI software from breadth to growing which our across to as in solution am in performance. showing collaboration results. continue with a portfolio EMC their core a see a solution fiscal meet velocity to of needs. approximate a intend unique PCs key is of terms endpoint cloud, created pleased our Recently businesses commercial We industry for increasingly also SecureWorks. billion capability. QX. run And Dell of annual our in and XXXX through line the to an $X in to us between top we rate security VxRail Dell the An broader driving storage edge needs example the family create an partnership to and our VMware with combining as up

flow transaction. business top-line revenue our units velocity billion, XXXX the strong full of our year XX%. We and $XX.X fiscal operating buyer greater in in focused was all the drove delivering are grade revenue in close excludes delivered by to strong $X the subsidiary $X commercial to up I up of investment of servers, results $XX.X percent, ratings. primarily we still that billion, talk billion, base growth revenue debt storage year. sales will emphasize Our of billion EMC We Jeff investing coverage double-digit Class of double-digit debt, transaction, to and adjusted business add down Shifting while about support business, $XX the QX EBITDA driven have billion, growth close and which did or revenue in billion detail. gross in $XX including expansion. debt, and to on while back and unit we a VMware back billion was for we cash three client. FY getting Since the paid to DFS-related or delivering V with of results, want XX.X% performance $XX.X

$X.X sequentially $X of up margins maintenance billion $XX to reflecting business, software data was revenue, ISG our CSG billion higher growth the and up and discipline in XX% basis involve hardware Our points XX.X% we in storage gross particularly margin to as deeper from QX was the into billion higher from resulting commodity to deferred Gross or due drive revenue XXX costs. solutions center. pricing increase

or Operating $X.X saw billion were also XX.X% and revenue. VMware up ISG contribution. mix expenses XX% of higher to We

for have been the prior supporting we As experience ourselves investing position customer on in mentioned in sales future capacity area growth. to calls, other

for revenue was ISG was Within servers XX%. the overall $X.X and income or Storage revenue the to up to networking $X.X of compensation Shifting performance increased Operating X%. expense billion, was variable Additionally, XX.X% $X.X was quarter, up BU ISG the revenue billion, revenue. XX%. billion, up of business. billion up $X.X XX% given our results

are with We pleased server velocity. our

generation storage requiring see revenue selling driven and value mix significant memory We continue for XXth consecutive to Storage and increases fourth average higher quarter. prices workloads the by more content. our grew in

$X.X servers operating the in up right to in actions income revenue. Operating $X.X commercial and meaningful of basis to have work storage, long-term was income CSG, was due points revenue XX.X% improvement growth double-digit supply driven networking. as billion down and costs. saw we billion or shifted better ISG taken We quarter revenue $XX.X storage focus this CSG dynamics. by X%. was billion CSG have to believe up and better due Within Consumer X.X XXX was more business. do in drive income to but chain and profitability in up our $XXX was X% revenue. pricing notebooks toward commercial we X% profitability mix, given of our CSG workstations. our component revenue was X.X% billion notebooks gaming We operating million or high-end

million bookings XX%, on Based in was reported NSX for broadbased bookings portfolio portfolio $X.X in grew of $XXX VMware QX. over for was and standalone which revenue. operating vSAN includes up licensed product saw geographies. income XX% all over strength or up XX.X% revenue diverse unit were business VMware License Our VMware’s XX% results within vSAN, a today the billion across earlier three VxRail

and other Our Secureworks, up business revenue, which $XXX Boomi Pivotal, was Virtustream includes X%. RSA, million

me to cash Tyler turn you and on over it Now to our update let capital structure.

Tyler Johnson

the flow In fourth we operations $X.X of billion. from Tom. Thanks generated cash quarter,

of factors is generation seasonally high revenue, QX typically and corporate a timing as bonus due quarter QX while flow such a payouts. is reminder, lower seasonality to cash As

Class used Class ending million fund cash performance QX help C, related impacted approximately we fees, to inclusive and to cash the conversion During which transaction balances. V publicly the $XXX of both traded new

from and $X operations ended year a of the billion. approximately cash with For full and billion cash the with investments flow we balance year $XX.X

free VMware. XXXX and year for financing fiscal adjusted $X.X billion Our when cash excluding flow growth receivables is

we continue years that as to coming over results. to the grow expect We overall our improve

so XX, hand, fund when from a cash DFS find cash subsequently growth is impacts operations. As DFS for cash debt. DFS from performance third-party. in financing is calculations. detailed we and a metric reminder, receivables our on our with an initially through to along impact of offset balance see flow the in ability sheet with our This in This web deck we Please service financing cash indicator the flow flow receivables the our cash Slide

prior well XXXX transaction working mentioned. as to good. largely flow was previously due the fiscal lower to fees It performance cash compared was in Although as capital year changes the year,

As discussed capitalization Dell have associated ended over $X.X working breaking billion. services year XX% expect its financial normalize. cash fiscal table. in the asset up supply XX%, inventory is and record XXXX inventory. we less web Please ended and see FYXX originations in billion $XX.X Fiscal year finished core $X.X detailed subsidiaries years. unrestricted led balance earnings our increase debt to in base growing chain XX were a core our the to the year at call assets growth in capital and almost debt, is five impact dynamics at year the deck see managed investments our temporary our billion. debt, and excluding doubled the which for continue with XXXX QX last Over $XX.X to core Net Slide we now the billion of year

We will pay around the which continue class significant same to-date. run financial model debt to flow down free enabled has generation, built

Our capital unchanged. allocation remains strategy

We achieving investment grade leverage are ratings. committed reducing to and

to flows. XXXX, flow debt free bridge cash cash to track draw of cash combination $X.X year remain and fiscal using we timing revolver a on approximately For of repay temporary billion generation, of sheet balance

new our term future into conditions. launched We intend $X.X to it the out the addition, profile our we term let coming on With optimizing turn Jeff of to our me In five market an the the already loan A-X. over maturity highlights discuss for of initial begun (X:XX:XX) refinancing that, our smooth towers With billion reducing credit year our recently XXXX. to have structure. capital improved process maturity year or A-X We operational with results. business focus a existing loan over

Jeff Clarke

good evening Thanks and Tyler everyone.

gains FYXX of As delivered areas. progress number made we across We a have the on I profitable entire in great share reflect portfolio.

enterprise engine. buyer businesses by investments have have our Pivotal, We've Secureworks. we in made go-to-market XXX,XXX than with commercial have the strength the amongst more of family collaboration We Boomi, expanded VMware, including and in our our and ISG and stabilized, base

VMware As result, in ISG, saw the included XX% double CSG our all year. our respectively. up which XX% business pleased grew all revenue a XX%, with three X% strong ISG We with Starting growth P&L revenue and four was growing growth fiscal are performance, with quarters. growth. and networking. we on for quarters across digit operating units Storage we to business networking. well grew improvements four storage for as all delivered revenue profitability fiscal ISG $X.X of revenue and XX% server income revenue leverage was XX% P&L due Server year XX.X% consecutive to primarily billion of we both nine in and and have quarters. operating the as storage or up FYXX

throughout gained the according through marketplace had share the points share In year. for have we more XXXX of XXX ISG straight else three over performance first quarters three storage in IDC. the basis strong and have anyone We now than to quarters

and billion of have $X.X During grew captured $X.X growth. we billion QX timeframe, to QX industry revenue that

expect when results QX grow and share calendar again to full for We in storage March. the share in releases year IDC

and industry We continue to solutions offers. demand see our leading strong defined other software for hyperconverged

triple main digits points according to XXX QX Our XXXX. revenue of VxRail or XXXX industry again our share this We’ve through our basis offering in basis leadership calendar we've quarter of extended share QX grew by through share points over year-to-date points IDC. increased share HCI and increased and calendar XXX year of leading four nearest by competitor our through server our over

March. share market again multi-cloud evolving gain spending. the as and We opportunity IDC IT when in about releases results of to expect the think remain by in encouraged we impact their We QX

Dell CES we any XX, won XXX continue products Alienware managed most and complexity a momentum external PC through our than off-prem is that more as expect chain with critical are Latitude awards, on-prem We CSG public innovation. our strategy. for in to We clear a to customer's Organizations long-term our the IT to and income and were exchange is last XXXX margin According combination our pleased VMware, operations displays supply and in notebooks and virtual Pivotal, workloads Dell consistency in and had there approach. perspective, see indicator was an cloud, the target double-digit we by provides cloud both segments. and a adopting and the year At PC to more year infrastructure core IDC, the growing, management investment the two-in-one in growth consumer our desktop, back growing IDC. healthy five innovate delivered data notebooks foreign X.X% need From continue challenges. opportunity industry towards a for notebook or of Boomi according us factors growth for cloud and multi-cloud XPS use organizations in an their and We of in solutions with in competitor new customers' the X.X%. today and industry to operating form multi-clouds revenue with for we QX. industry industry at EMC across and CSG, growth cloud to as workstations, the indicative Shifting strong different our improve a XX% units other architectures. our grew leadership to physical workstation high-end ever design significantly X.X% edge, year and of significant differentiated and Customers such increasingly the including all headwinds with our the Operating average of outperformed XX%. multi-cloud month, edge, revenue We commercial needs. the running portfolio. and big now and for SLAs. consumer tools, deliver This in in above declined commercial our CSG above and solutions the in as fluctuations is

collaboration We our workstation grew to year, have shift according units about matures. and flat will share share units panel the the and Dell in XX talk within for XX performance XXXX point have We Dell points PC for panel innovation to workstations six consolidate. by integration leader industry industry worldwide IDC, best monitors the and businesses the increasing according XX% to and displays the XXX XX.X% industry flat the gained worldwide outgrew I time top with as have now leader of quarters. share We for in IDC. of remained our our and family first as the the increased continues quarters in in and XX% consecutive been of one the monitors reached the basis now share for consecutive now increased competitors gears XXXX. in

We between sales sells cross VMware. continue to Dell EMC notably teams, and increase most integration between and

a of Technologies, Gelsinger VMware We higher more with solutions Pat part synergies development and Dell around the or customer on our are the heard six family there realizing lot have they part Dell to Technologies come. You of about revenue talk as and collaboration aligned have collaborate teams in VMware broad compute, ONE. talk cloud and Dell of our hyperconverged, detail the world key storage, Together in late innovation at around areas value we to April. bring platform our software-defined Technologies Workspace will to software about networking, greater software-defined customers with cloud

positioned head as to into we work are While we have very do, more well FY’XX. we

VR our that, and and across to investments protection continue will We data the storage Dell initiatives, and increasing transformation me over focus to improving on coverage With and family. from operating margins, solutions growth, sales turn it leverage server business let back collaboration Tom. sales development Technologies and

Tom Sweet

Jeff. Thanks,

need dynamics. global We environment customer's in believe as the fiscal of in potential to solutions other macro positive, We receptivity into we headwinds remains and year strong. business are XXXX our Technologies spending Dell remains and that IT the navigate macroeconomic confident will to set tariffs, heading China such

IDC fiscal years first We our IT than few commodity are grow and twice XXXX. year is next GDP aggregate expects opportunity of expecting deflationary to continue the to to in the more promising. over costs market be half spending

needs on with We cash and generating our executing the which will growing include ISG trusted driving flow for executing margins; balance and their customers of sheet, being our partner by our listening delivering share market above growth addressing the capabilities. and range areas focus continue gains, in and by driving and full strong profitability balancing a and strategic

non-GAAP revenue $XX between billion. Moving to FYXXXX, we expect $XX in billion

reduction new As to an accounting $X lease factors a the estimated reminder, guidance our in standard. billion due

factoring billion expect in in due continuing standard new and the leasing an reduction million and investments between $X.X $XXX and $X R&D. non-GAAP We sales income estimated billion, to operating

XXX plus or minus tax We points. basis non-GAAP rate expect be to XX.X% our

diluted and between in to million non-GAAP transaction in and common income associated expect Technologies interest shares. interest XXX B Class We and this range between for stock and income and net EPS to to following Dell $X.X be diluted $X.XX, adjustment attributable VMware, the factors the expense Lower count interest SecureWorks. the Pivotal increased with ownership XXX share minority

as there and into on going head synergies. We on from many the we including of perspective, work guidance web execution client do, have non-controlling XXXX provided more detail but server revenue in velocity, VMware right fiscal things I'm interest to deck. Slide optimistic have we performance the our more is XX adjustment an

year deepened We in of family have solution cross-sell our progress and across made collaboration storage and the this development businesses.

our are We the strongest and one customers digital the future. well-positioned with industry we partner is of to Technologies portfolios their believe help there in better Dell than no realize

Q&A. business begin it turn Karen our way, disciplined cash to continue and relative run a to With focused on flow. share to We back in growth, gain I'll that, long-term

Karen Litzler-Hollier

Thanks Tom.

can participant? Erica, first get Q&A. Instructions] [Operator Let’s please the you to introduce

Operator

We’ll Huberty Stanley. Morgan with from take Katy our first question

Katy Huberty

good the the and ties fourth afternoon. How you, in margin the lower quarter in to memory much growth operating factors mix Thank of business? expansion other versus cost in

Tom Sweet

Hey, Katy, it’s Tom.

think That expansion. – I profit cost start business if sort combination CSG commodity did and our can generally fact Jeff, mix, at terms in. Also then, of jump you that made consumer progress Let you in pleased – me quarter. mix was at as say. a if commercial in commercial this were we should with think of go you about I about favor we Look, versus versus the operating of look look our should think in you the

QX that saw this so again It server think, then strong clearly is to quarter I was traditionally a we And And us. continue an be, us, it growth within general, for And in was helpful. appropriate been. in has ISG quarter. clearly storage the business, obviously range for

pricing an at QX. aggregate relatively the those mentioned. benign. all you'd cost don't QX step know environment if the in of And XX.X% look, any P&L, if are margin expansion add to I was with in other… I pleased think back components anything Jeff, XX.X% level think a component I itself of generally and the Q-on-Q Plus factors about that of yes, on the I it's think you framework and or So just combination the from

Jeff Clarke

Tom. No, I hit we you Katy, are it, in deflationary think environment. a

our That's for to is basis our business. rate. QX the X% little And up reasonably why XX%. a growing at to quick QX That's focus inventories cost grow That's it's the and You storage leverage mentioned. are on with exposure gives income key came for benign know just also a I'll over Tom our operating a lower low Pricing of the components relatively where as continue year-over-year that by from. on model storage benefactor certainly ISG in us to P&L us.

Katy Huberty

That’s a great color. you. Thank

Tom Sweet

You’re welcome.

Karen Litzler-Hollier

Katy. Thanks

Operator

Our question Toni Sacconaghi from is Bernstein. with next

Toni Sacconaghi

sort top like thank see I on I'm days? and your QX. about wondering I how if XX normalized you. X% you. of about see in really that's China the Yes, whether I'm full guidance should any currency as demand quarter comment a wondering puts and basis, you probably potential next things first talk you the to about know at providing company, whether public pricing particularly you're on historically, in you a whether and think base. we But the if can environment the can you're this the you only line. And any go-forward about think right competition sequential And the is all sequentially X% particularly over change for takes year. change down Thank

Tom Sweet

Okay, Toni. It’s Tom.

and seasonal historical about And you of and as our of QX, the the you QX year think familiar a minus weakest and sort is range. softest to business pattern, it. at it that sequentially, perspective. is operating Storage where to with you of on good the an down XX% minus level business our, right. of the income income and we're clearly, roughly frame down QX fact that XX. example, try minus sequentials, if will, of QX sort being how But revenue need storage you a traditionally of op XX% And I I to me legacy side the guide from on X% EMC is roughly the like look traditionally deconstruct thinking and if traditionally stepped a think storage at think – XX% think aggregate sort pattern good about the that I Let we quarter quarter all that think of about something our and is revenue storage a is are

is various revenue to it we QX roughly look, So traditionally the The parts softest of VMware And I expect the down mean, is sequentially. as quarter. of the this I the roughly historically be op our XX% about from think sequentially perspective. inc dynamics And like XX% piece P&L. an again year on

I positioning about coverage the think particularly as year. we sales And roughly – in going I But you to think not about calls the improve related that we're and through continual they about past right lot about fact we've the think long-term dynamic got we've guys the coming Star the want P&L and to some investments around the give investments for think get do ratio. talked a coming North in, to I to other ensuring it's it models through talked first one-specific important sales capacity, look, half you of guidance. that into on that we've the

want QX. do you frameworks think go I about OpEx to as you from to QX So

roughly you to If seen would sequentially. ago, – is increasing you roughly what a have X% OpEx look year

happen, do slightly from I down the expect be While I to expect to OpEx level. that don't QX

to as the that So we year, through through improvement factor to turn. what step you is I think go as sales And in. we the improvements got should see begin year productivity you've then as the

rough think I FX how from an that's So perspective, about just framework Toni.

after had XXX expect I I headwind. moderates QX then that think we in QX I something about and think in similar would that. roughly point basis

dynamics that stable. you guys really You your that think it’s the and because have way about on dynamics you quarter-on-quarter relatively through quarter-on-quarter know know a work traditionally basis we to pricing of FX basis been

to make the want around annual should year. the through to the And way sure environment provided guidance we look, about. think something for think we position we stable. give the good about you’re right, be your think I think as you to that I FX framework you, you then And relatively So coming feel year, pricing we

that, thinking about first quarterly to a are Given more things level, – we guys detailed think you we've the is about. this are to in out that give time the you breaks some tried

Toni Sacconaghi

Thank helpful. That’s you.

Operator

Harlib Our next Jeff Barclays. with question from is

Jeff Harlib

ISG, was performer how year, obviously you the coming In huge side afternoon. servers outlook past you just a year, can see and Good on the this about revenue talk revenue this into the And storage was solid. see of the factors convergence some I as in a your there? you look mean, what demand position and both sub-segments? are do environment you the at

Tom Sweet

Well, maybe I'll start P&L. with and Jeff owner should jump it’s the obviously. of Tom in Jeff, as ISG the And

still it's growing. XXXX strong mean, from minus to CPU So the I as China, roughly some on you is is Dell – right one year, be basis, Xx which focused it what Servers, IDC mean, GDP. framework, we X.X% dynamics which essentially think about given X.X% see year. that’s a coming call the is storage think IT And perspective. calendar server year. our as think of think that macro a they positive, on X.X% fiscal calling is me a is – globe, I as about market revenue Having have is thinking the not And as that GDP in is, I down from a have the growth major flat. according X.X%. growth I is most I look server – Servers across forecasted so it's the now for nor the that, for spending roughly do call The a segment But to let that way. you you guided from we’re right? I'm roughly at calendar is still had – around markets to market XXXX market think look where on U.S. is if mainstream ground a as its a which IDC fiscal about globe next profitability with we're you of the I IDC expecting revenue look, said terms the XXXX roughly stronger we mark

but I healthy go some still navigate to So some through to at the now. probably us think macro environment We're times, for right job do. have the to the we waters through have going execute choppy of that's

So just servers of I made Jeff, about could some think we we're specifics the with overall investments then and feel thinking we've the how of maybe good chat in storage the And you qualitative… overall. about and

Jeff Clarke

you In billion I'm mean, forecast. mark and about $X revenue. terms, mainstream absolute the talked market of indices Sure, happy clearly the added incremental I storage to.

market fair We have a little to We share, position you servers, when taken this in share our we're consolidate than opportunity, continue at going being look billion to it for consolidate, $XX-ish value think a of lower there's we million, blade generally amount big where two-thirds mainstream share. $XX share in or or room high you a of look workloads those much ASP at us to particularly have when modular rich areas. less

to room there's think there. grow we So

continue series to for some – private will on-prem clouds see suggest We research on the multi-hybrid IDC or be mind, on over we there it's bolstered years coming world. top well $XXX on talked a see as think be by recent the I back to that hardware bodes cloud There's on in of that previous billion billion that. and at been for next basis, clear, of think call a to of out. and on-prem, spent that on continued in environment services build continue the we're private another on-prem go-forward software four to cloud that. the workloads still be We my fact by least, repatriation is we our roadshows, I think that early throughout $XXX

in a in On share the storage turnaround. in I year side, mentioned first, quarter I'm really I've pleased again, that expect of to-date, as gain I and row business XXX fourth we of prepared growth row, talked comments. about a basis in a have four quarters the points the

investments capacity sales, business. stabilized coverage and We the net buyers, to new have yielding good are made is in The do, we've clearly that plenty of but we've see. work to which

a storage than We it the we portfolio The ago. than to high FY were very compensation are us. the XXXX to is today tune while have our growth is products And range talk unstructured enter Does ago. way storage, highly mid focus you've was mainstream the and share for [Indiscernible] storage – competitive space in in help? better both need year we heard mid server me It's that which of me consolidate expect continue take we leadership they is where to a literally position more performance built-type the the good plan that area. high-end. of And area see we unstructured continue I say, to to on shape range, as serve in the and and a about today. a simplify to we the sales we marketplaces competitive important year out a clearly have much in that the

Jeff Harlib

Thanks very much. Terrific.

Jeff Clarke

welcome. You’re

Operator

Our Rod next Goldman Sachs. question Hall with is from

Rod Hall

for environment. I for hi. about rate just and I feeling environment. you're question. to Yes, know taking on Tyler you Thanks wonder to debt I how guess start had that wanted that ask I commented, thanks And on interest Tyler, plans out. maturities I my off, and the push your

how got mathematically I partly commentary. is I you're as an a And benefiting you replacing do share debt the some due and that much due at ideas, activity share taking As of reduce to sure gains accelerated bit better course, give how wonder share storage, could you're of are to kind well. clarify the wanted just – people opportunity whether, share share Thanks. in then look competitors? your as has replacement you know know, existing to portfolio, that from your at from feel there's footprint you better. to I I'm competitors taking now, your just And storage second product from you're little refinance? accounts and that us your are causes some right if But you do thing it then look as to like of many interest you costs

Tyler Johnson

Rod. Hey,

somewhat that So, seen Tyler. good rates down. Yes, I’ll is news come mean, are think tenure the look, go right? the first. This stable, I we've interest I is

high like so. free. as I think a it had two down or traded for It's as back three,

in on good having shape we push probably think in weighted pick. I think it average impact a I obviously of without maturity or on what look, interest end these profile interest So, depends to our But expense material and out be the the maturities the some rate. we'll that

Karen Litzler-Hollier

we just at one Hey, but you with can this taking follow-up IR team. as We're time, question an Rod.

Rod Hall

Sure. Thanks.

Operator

with America Wamsi Mohan Merrill question Bank is next Lynch. of Our from

Wamsi Mohan

the solved all. I for from Tom you're any wondering guidance the you. overall customers your sense if at seeing XXXX. was geos fiscal across any thank Yes, of caution of

of you. your some first second on about half there wondering versus if have I'm competitors to Dell. that for your case half first half made spending. a infrastructure stronger you think or half view bio-seasonal just a in second versus And noted half be Thank is second

Tom Sweet

year. to let they start maybe a or perspective the significant about the making. and delay Well, Jeff or comments talk our in with were on me guidance that bit to tell any would of terms a flip today terms think we it activity push I to then beginning investments haven't customers broad anything as to caution you from really little we think set, of of couple I slowdown But, out then seen in planning I'll customer the look, about and just infrastructure from

what – customers as – IT model think spend one I think sort which IT that to of a and viewing also central so that's days, – business many about we're being capability I you essential. think the the of I the think these are because thing. part that in is it if

see typically the medium on the and medium that. businesses you our with direct in our those And particularly So when and model Also direct downturn, and our small and it haven't is really answer with seen we business. cycles no. interactions small model, turn, businesses, see we remember right, first that a

in of point changing this evidence customer no really time. at behavior today, So

look, year we're XXXX. optimistic so, fiscal about And

I and you we're about the Jeff, that for we'll realistic as navigate have the the I generally is say anything us. environment well. know positive And execute how, back… could to about I run infrastructure think business don’t still and think the think side you if But

Jeff Clarke

multi-cloud, large that digital points, high is and would the drive discussions most modernize about this No, of the transformation real, down the the I mentioned to And towards it with world to I driving small of need companies having I hit hybrid medium it's What digital agenda to and to to earlier. on digital that even are add transformation the is, Tom. business. you all continue, is think customers transformation from

somewhat optimistic continues in be the to be we're environment early the to continues there as transformation the So today. and innings digital

Wamsi Mohan

half? half second first it Is versus

Tom Sweet

year, terms to Look, think you sales parse going been we're cycle some of one out capacity of some that as as the the of those not beginning the the adds. would half realization the investment think of back the benefit year. do we've just to of to of we point is, I capacity, I see of you on back get thing – to about – of in some expect the which we

about before we're ramp but occurs think – about year. optimistic that I you there to the talked I the As are productivity

Operator

Our with Fargo. next from is David Wells question Eller

David Eller

questions. evening good taking and Hi, thanks for the

the You've of bit calling guidance year. expansion for got your looks is, a like it's margin it little throughout

of and where And expense and if operating the gross margin at you progression maybe through look on you year. us kind some line and so QX, view the wondered walk your Tony way? puts just different probably as of toughest on, takes quarterly we know – a could of earlier, see compare us that then I little I would asked that the of that, you to as expect the if you but year as you a could the or view would bit

Tom Sweet

with profitability business. help about, And contribution do One well the OpEx expand as profit terms in expansion, as couple to… is you. server VMware. of how Look we're around operating think in margin how thinking if gave it the FY storage you Then should parse the think thinking over think we, you let that as the relates run expansion time of that XXXX, think and we we – I about which driving about profitability continuous a to we want is and don't you consistent in give to that, I the know, expect thoughts. I me of guidance as you of that context about themes we

David Eller

out Just your as tough any quarters compare. you call

Tom Sweet

particular it, think storage compare, the think the acceleration was probably in where year-over-year, some Yes. you the as saw would in of we call I business. year about toughest know, that's last the we it

the I the think of begin to how on the with that – begin the the start to probably of back the toughest which So to one investment the half half we about it, of came coupled been made, we've And I saw scale the as scale it. think ones has that's the year. year OpEx we in that better think first year, than that's

David Eller

Great. taking question. Thank for you the

Tom Sweet

you. Thank

Operator

from Wolfe Milunovich with Research. is question next Our Steve

sorry. Okay,

Our from with question Citi Jim next is Suva Research. Investment

Jim Suva

very Thanks much.

slide the group client up solutions Looking XX, number the segment.

channel ramping even progressing? see You you in direct to in also offset year year-over-year clients down by we Thank that coverage, run operating investment a rate you've lot Are is, is income beause that going understanding know, you coverage, Dell more about, been there X%, you're the do group. you the does in Slide you note on up it's coverage. that bit happy. solutions help offset admirable a revenues X%. of grew my us more using you're at a sales your what as now Can know you a question the but mean little understand, on by quite little I sales And but that have the sales something you're are talk these

Jeff Clarke

I'm specifically Jim if Jeff. about add sales We've the think talked will in to channel our the business also capacity reaches just the general I'll previous and sure expand coverage. side, and well, our start. reach as This across but you entire to well. customers storage to on makers sense Tom about but a more is broad references direct focusing in sales lot

is to we've Tom drive a to incremental on And margin. and year, revenue in expect invested reference basis. second we productivity really the of begin So the year-over-year operating said as around, the half that sales

Tom Sweet

I other you should it. Jeff think Jim, and thing about think the

I in incremental unit is well. flowing associated of with some these because on strong results, prepared some through frameworks and that frames, as that the coming think incentive remarks, of KLs with performance in commented compensation costs I my QX the just business of business

customer roughly which businesses direct, success making other well through as into that's framework. the other a – the XX% channel about, our thing capacity. think key the We, Jeff of hit our context I had right to new sell that we model net a to laws to long-term and customers is but sure So go have the is think well we coverage existing and of as direct hit both grow cross long-term expand

the how we coverage that's So think about models.

Jim Suva

that's quite Thank you. detailed, Thanks so useful. much the for

Operator

Paul question JPMorgan. is Coster Our next with from

Paul Coster

get income out net that for it's wondering, quite guidance something the and here. EPS year specificity to Yes, in just around is can so thanks I'm there for figure question. is align taking line. easy the The or interest other what bit little on with it to you delta model we the I until encouraging us my a expense give more is can And

Tom Sweet

Look it's Tom.

frameworks you that of that the income with billion as carry think we QX, a dividend did lower put in that so would get tried way like your variables interest for there. we, be we about baseline obviously, tried P&L I of bit right? lay sure Class model to debt income, of mean about there be tax you'd to on take sheet you’re as which will through to team like $XX out have in Slide that look, And And is transaction, this then the remember I the from it start on XX you at terms V out you know, rate, you we’ve I'd we into deck. you came which I interest you in VMware so you on IR look an call Paul, There set were know, aligns more to work going walk you two ask operating give some – tax a conversation that using get assumptions a talk, so thinking cash to what of the V on think year a number how So happy it. $X and then elements But a hitting. as rate. are in if how we year. web next Class that. – And And so, the essentially balance that that as billion and transaction to the were and to fact an there's as complicated you the which and was the part that low in said, can is not think And obviously and are more to detailed interest to the for of your everybody which about, our non-controlling calculation, the if see then that's you for

Paul Coster

it. you. got All right, Thank

Operator

next with Our question Cross is Cross from Shannon Research.

Shannon Cross

Thank you much. very

check, typically your sales to February plan. you to make wanted changes in comp Just

in Thank you if of year on But XXXX would a in about, could opportunities VMware. your think you VMware, focusing you. be sale pushing what and sort terms with of helpful. you're salespeople bit talk margin terms with of cross this for also I were then just that in comp

Jeff Clarke

Sure. Shannon, will on pile a take me this I'll and certainly – as Jeff is stab excuse then and Tom well.

will earlier, of bit taking plan. sales if are I think another I As we little you compensation a mentioned tweak the

the we've non-storage the the VMware obviously there side, storage components is There's my communicated there's within continue I VMware buckets there's ISG you then in compensation to and towards past, within bias and we plan on the business, will. storage. think and ISG side basically the the CSG side three if and side

to that. pleased very this towards We We're and to year we'll continue progress to try with made that. past make continue we've the tweaks optimize

of last the it's talking the about part better the what we've been So year for of half. continuation a and

on excited I that. means can to pretty We’re sure I'm basis go-forward and about a what much that add more not

Tom Sweet

a add spend broad is, trying No, changes all to doesn't the Shannon, new we've would cause year with tend to that what amount to of Tom. plan only time is because thing I comp sales sales the not plan. Hey to do this the out Jeff. tried organization fair make it's Look, look the figure comp

sort that think is it said, focused with nice right I get to we're and our of on want of what focus, and sense push. direct right. And as selling that elaboration is that both Jeff well selling solution to to sure attention valuable got a with make So to channel, doing, we're right about which us those we that you make our the we small adjustments lot and think what organization as the

where So incent services our to we're refinements higher the making value that channel and to like driving ensure appropriate. attaching them they're storage offerings program to

Shannon, it's think refinement, we continue as I continued again, to tune to the So we'll and a make progress. continue model

Jeff Clarke

that it building we dealt prompted collaboration thought solutions Yes, year and plan we've a the Tom, drives toward VMware. you this built clearly said the with on that

put certainly mentioned if about you we I Workspace behind VCF, cloud SAP’s. about If the different clearly and VxRail, compensation in think we across you to as if incentives think incentive will on my that sales put, from So Dell, ONE our vSAN, work force software-defined solution that. I’ve data center, well. sales in comments

control products, time Dell as integration this on Boomi, of compensation level can our we We'll infrastructure EMC think Dell Pivotal, top sales our we of across that packaged operational about that VMware, selling think cloud I of leading concept I last Technology you introduced properties some and this solution weeks focus As that eight, it's well. around selling I clearly than imagine talk and But that year of I to higher more at and prompted I sure put communicated, the make levels SAP that, nine about about and last we this across World wanted year. Tom guess Dell is where Technology allying more away. integration plane collaboration

Karen Litzler-Hollier

question. last Thanks, Shannon. Erica, let's one take

Operator

with Raymond from question final James. our take now We’ll Simon Leopold

Simon Leopold

philosophical and at that. as options Great. sense debt, is on the you or in Wanted of best of the see what's beyond your I get beyond you understand cash Appreciate priorities operating to really maturity out better And but thing, things certain terms bit little what maybe get operation. that. want to you've I whether available the pushed assets it's of like getting what I'm generating perspective, a a to a model,

us just you. options help Just understand are. Thank what your

Tyler Johnson

I'm look with really cash, cash which on off, if that. year business profitable growth like the this the something lower driving growing strong year, $X.X I to topline what's The is ended we end positioned throw nothing about consistent smoother. talk of something approximate flash yes, billion a in right? So, or you're terms the profile to divestiture the forward Hey, maturity is talked reality look, the about and which to the is is and our have to most well think we very to I pay mean, what going Tyler. going I focused unique look down and of debt will see balances you that to going is like balances,

but we to I do, are. work really of good bit little felt a So where

Simon Leopold

Thanks very much.

Karen Litzler-Hollier

Thanks Simon.

Karen Litzler-Hollier

will A available our be for on Well, replay today. call investors.delltechnologies.com. that wraps webcast this of up

week. our track And are today. As World XX Thanks providing year. detailed for this hold joining through Event a planning in everybody Annual be Las event next event we this Technologies more to reminder, We'll us hosting Vegas. about this an X, be May April information we will Dell with IR

Operator

This We your concludes appreciate participation. call. today's conference

You may disconnect this at time.

Dell (DELL) 1 Mar 192019 Q4 Earnings call transcript